Tax filing in Spain, i.e., the deadlines to file all the taxes are really easy to retain. There are different rules for large  tax payers and small and medium size entrepreneurs. Generally speaking large companies have to file monthly, while SME file quarterly most of the tax returns. The threshold is set at 6 million Euro, that is, if the prior year the tax payer’s turnover exceeded 6 million Euros he would be deemed to be a large business and monthly filing will be required

Let us dig further

VAT filing dates

The general rule is that all business must file quarterly VAT returns. However, large players must file monthly tax returns. As explained in other post – VAT compliance in Spain– , VAT is only refundable at the year-end, so till then the VAT credit can only be carried forward.

Tax payers which normally have a credit (for instance, exporters) can avoid the financial cost of this deferred refund scheme by registering in a monthly refund registry. Then they can claim the VAT credit each month. But this possibility has the drawback of having  to provide to the Tax Office  a detailed report of all the transactions carried out each month, thus increasing substantially the administrative workload.

At the end of the year, the tax payer must file a recapitulative statement (form 390) of all the tax returns filed during the year. This kind of statement is generated automatically by all the tax packages available in the market, so actually there is not any marginal workload involved.

Tax payers doing intra Community transactions (i.e., intra Community supplies of goods, intra Community supplies of services and triangular transactions) must also file the recapitulative statement (form 349). This statement, must normally be submitted monthly, although a quarterly or even annually reporting scheme do exist for small business.

In case a tax payer carries out intra Community supplies or acquisitions of goods,he must also file the “Intrastat“.  The Intrastat is a statistical statement which must be filed monthly, during the first 12 days of the following month. For 2018 there is an exemption threshold of EUR 400,000. So if the tax payer did not carried out expeditions or acquisitions exceeding EUR 250,000 the previous year it is exempted from this statistical obligation, unless it reaches said amount during the current year.

Corporations Tax filing dates

Regarding Corporate Income Tax it must be filed within the first 25 days of the six months period following the year-end. So for companies whose fiscal year is the calendar year (99 % of the total), Corporation Tax must be filed between the 1st, and the 25th of July of the following year. For instance, the Corporations Tax return  corresponding to the 2017 fiscal year will be due by the 25 of July of 2018.

Companies are also obliged to file three advanced Corporations Tax payments during the current year. These advanced Corporations Tax (“CIT”) payments are due in April, October and December of the same year. For instance, the advanced CIT payments for 2018 CIT are due in April, October and December of 2018. The general rule is that the payments are 18 % of the CIT payable the last year whose final CIT return has been filed when the advanced payment becomes due. The first payment of April shall be calculated on the 2016 CIT payable, because in April 2018, the last CIT return filed was that one. Note that in April 2018, the final CIT return corresponding to 2017  would not have been filed yet, because it will be filed in July 2018. The payments of October and December 2018 would be calculated on the CIT return of 2017, because when these payments become due, the 2017 would have already been filed.

Large companies  have a different method to calculate the advanced CIT payments, but the dates are the same. For large companies the base to calculate the advanced payments is the year to date tax profit up to March 31st, September 30th and November 30th, respectively. Obviously the amounts paid in each payment shall be deducted from the following advanced payments.

Payroll tax filing

Companies who have employees must also adhere to the PAYE scheme and file the Withholding Tax Return every month or every quarter. Every year they must provide to the  Tax Office a recapitulative statement detailing the amounts paid to every employee and the amounts withheld. They must also provide a certificate to the employee with that amounts, which the latter will use to prepare their Personal Income Tax. Actually, all the professional software used to prepare the payroll of the employees automatically generate these tax returns and certificates

Other tax filing in Spain

Apart from the above, there is an informative statement (form 347) to be filed every year detailing the customers and suppliers with whom the tax payer has carried out transactions amounting EUR 3,000  or more. The data to be supplied are the name, address and overall balance of the transactions, VAT included. However, if the information to be provided has already been provided to the Tax Office in other tax statement, then it must not be reported again. For instance, intra Community operations must not be reported  because they are already reported in the form 349 – Intra Community recapitulative statement.

Financial reporting and other accounting obligations

The basic accounting obligation of companies is to deposit the annual financial statements into the Registrar of Companies. This is a compulsory obligation and failure to do so can trigger not only cash fines, but can actually jeopardize the operations of the company, since the Registrar is “closed” to that company. As a consequence, it cannot register any Shareholder’s or Director’s resolutions, like a capital increase, appointment of Directors, amendment of the by-laws etc until the financial statements are duly deposited for public inspection. The financial statements to be deposited comprise the Year end Balance Sheet, The Profit and Loss Account, the Notes, the changes in equity report and the Cash Flows report. The lay out of these financial statements is compulsory and must follow the rules of the Spanish Accounting Plan

Apart from this basic accounting obligation, every company must keep appropriate accounting records. There are two sets of records, the pure accounting books and the tax books. The accounting books are the journal and the inventories and Annual Accounts.

The Book of Inventories and Annual Accounts will open with an  opening trial balance. Each year, the quarterly trial balances and the year-end inventory and final financial statements must be included in that book.

The Journal must record all transactions relating to the business of the company. However, it is admitted the joint annotation of total transactions for periods not exceeding three months, provided that the details of them appear in other records. It is doubtful if the Spanish Code of Commerce allows  the existence of several prime entry books, such a Sales Journal, Purchases Journal, Wages Journal etc. or only allows the existence of a single General Journal, where all transactions must be posted, although grouped.The wording of the Code of Commerce ,dated 1829, suggest the existence of a single Journal, but since all the Laws must be interpreted with  a historical perspective, my  opinion is that the existence of several prime entry books should be peacefully admitted nowadays.

The Law does not require that the accounting books are written in Spanish, but the entries must be in Euro. The names of the accounts and the codification of them is completely free, that is, it is not compulsory to follow  the codification and set of accounts established in the Spanish Accounting Plan. The books must be sent once per year (before April 30 of the following year) to the Registrar of Companies, for “legalization”. This is done online at Registrar of Companies

Since the books nowadays are digital, they must be sent by Internet to the Registrar of Companies, which puts a “digital footprint” on the file containing the books to ensure that this file cannot be further edited. The books and all the documents supporting the entries (invoices, bank statements, payslips..) must be kept for six years. Therefore, the Spanish legislation is quite flexible in regarding the accounting books and normally any company using a foreign ERP or accounting software can meet the requirements regarding the content of the Spanish Code of Commerce. In most cases, it will not be necessary to redo the foreign records in order to prepare the official Spanish accounting books, saving a lot of time and money.

The tax books are two: the register of invoices issued and the register of invoices received. As the names suggest, these books are no more than an ascending chronological order list of all the invoices issued and received by the company. Each line of the list contains the data of an invoice and that is all. To review what information is to be included in an invoice, read our post about the requirements of an invoice in Spain . This reports can  easily be generated by any billing software or ERP, so preparing them is seldom an issue even for that companies which do not use a Spanish accounting software to record their transactions (often because they belong to a foreign group).

Note the information contained in this post is updated at May 5, 2018

Tax Partners is a professional firm providing tax and accounting services in Spain since 1996. Please feel free to contact us